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Silicon Valley's best kept secret: Founder liquidity

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Re: Silicon Valley's best kept secret: Founder liquidity

#471

Post by zenlikethat »

carterklein13 wrote: post #327
koalaman wrote: post #266

I recently left a long career in FANG to roll the dice on an early startup. I was pretty surprised by the uneven terms between founders and early employees. From what I could tell the early employees takes more risk than the founders because they don't get that magic token dollar turning into their share of the founding equity event and have to pay the fictional valuation of the seed to convert their options. Dependi…

I did a similar thing to you. However, I do feel like cutting your teeth as a "founding engineer" at an early startup has 2 major benefits: 1. You get to see what it's like under the covers, as you said. It's not nearly as glamorous as it looks from the outside. And yes, as an early engineer, you share in a lot of the downside without nearly an equal share of the upside. 2. You get to leave. Unfortunately, the startu…

Getting to leave is so underrated. Nothing keeps your head above the doom and gloom like knowing you aren’t shackled to the thing, and the world’s your oyster if you need to move on. We live in a weird world if people don’t think a gig with $160K salary, 2% of the company, where you can work hard but not 24/7, and _leave any time you want_ is a bad gig. That 0.25-0.5% after one year that you get is PERMANENTLY gone for them even if you just fuck off after a year. Years later it could be worth millions.

But anyway, as founding engineer you get to set the systems, culture, language etc. maybe some people don’t want the responsibility but for others it’s an opportunity to build things out in our own image and learn a lot.

Re: Silicon Valley's best kept secret: Founder liquidity

#472

Post by ipaddr »

Finbarr wrote: post #379
whynotminot wrote: post #367

Earlier quoted context omitted.

It’s a shame you were forced to take on this burden and not allowed to be a regular engineer like your peers.

Nobody is forced to become a founder. A lot of people are naive to the sheer level of stress involved, and think it’s going to be easier than it actually is. You don’t find out just how stressful it is until you’re already super committed, have raised money, have employees, and there’s no easy way out without screwing a whole bunch of people over. Founders tend to only talk about the good things happening at their co…

If you can't stomach screwing people over you shouldn't be a CEO.

Re: Silicon Valley's best kept secret: Founder liquidity

#473

Post by palata »

CSMastermind wrote: post #358
palata wrote: post #345

Earlier quoted context omitted.

$200k? Do you live in a place where this is considered a bad salary?

It's normally considered a bad salary in comparison to what you could be making. I won't speak for the poster but I left a ~$1m / year TC job ($300k base the rest RSUs) to join a startup. I have a good salary compared to the population at large but it's a fraction of what I could be making on the hope that my equity turns into something meaningful that makes up for it.

I wish I knew how to get to $200k. Not even mentioning 1m/year, that seems absolutely insane to me.

Re: Silicon Valley's best kept secret: Founder liquidity

#474

Post by chucksmash »

onlyrealcuzzo wrote: post #348
Finbarr wrote: post #66

Secondary at Series A is very rare. Part of the reason more early employees don't get included in secondary sales is because of the Securities Exchange Act of 1934 14e-2. If you have more than 10 sellers involved, the transaction can be considered a tender offer, which triggers additional regulatory requirements and disclosures. > As of 4 months ago I left a very successful stealth startup (which grew to 40M in ARR i…

Especially 5 years down the road when you own ~30% of a $100M company - but you know there's a decent chance you'll walk away with very little, if not nothing - while your peers are all making ~$1M per year working 6 hour days at FAANG with a life partner, maybe kids, and a sizable net worth that isn't going away. Sure, you've got a decent chance to rocket past them in wealth. But they've got everything they really w…

s/deci/deka/

Re: Silicon Valley's best kept secret: Founder liquidity

#475

Post by darkwizard42 »

sashank_1509 wrote: post #380
throwailearner wrote: post #297

Posting from throwaway so I can be very open. I joined a YC startup as engineer #1 with close to $200k salary and 2% options vesting at the usual 4 years, with a 10 year window. I feel like this was bettern than usual, and for a while felt like I struck an awesome deal, but as time went on I realised I was building everything single-handedly, while getting (at best) 2%, which started to annoy me deep down. Over two y…

10% to a founding engineer almost never happens. You’re in cofounder territory. There really are 2 reasons to stay in the startup, 1. The startups reaches a great valuation. If it reaches a 1B valuation, then even assuming 50% dilution, you have 10M for 2+ years of work, almost 3-5M per year TC! Yes your founders are earning much more but comparison is the thief of joy, you just got a salary that no big tech company…

TC isn't TC if it will remain illiquid for a number of years. That is the issue described in the blog post. Founders get great secondary liquidation in each round which helps realize some of those gains. For you as the early employee you get stuck with a now more valuable potential lottery ticket, but no clarity on when it can be cashed in.

Re: Silicon Valley's best kept secret: Founder liquidity

#476

Post by totorovirus »

What shines better in a resume? ex-founder or ex-founding engineer? If ex-founder is a better role for next job, I think founders are taking much less risk than founding engineers. They get all the exposure to talking to rich people, VCs, learning how financial game works, which i regard much more rewarding career-wise.

Re: Silicon Valley's best kept secret: Founder liquidity

#477

Post by seansmccullough »

onlyrealcuzzo wrote: post #348
Finbarr wrote: post #66

Secondary at Series A is very rare. Part of the reason more early employees don't get included in secondary sales is because of the Securities Exchange Act of 1934 14e-2. If you have more than 10 sellers involved, the transaction can be considered a tender offer, which triggers additional regulatory requirements and disclosures. > As of 4 months ago I left a very successful stealth startup (which grew to 40M in ARR i…

Especially 5 years down the road when you own ~30% of a $100M company - but you know there's a decent chance you'll walk away with very little, if not nothing - while your peers are all making ~$1M per year working 6 hour days at FAANG with a life partner, maybe kids, and a sizable net worth that isn't going away. Sure, you've got a decent chance to rocket past them in wealth. But they've got everything they really w…

> while your peers are all making ~$1M per year working 6 hour days at FAANG

Unless you are a manager, in which case you are working more like 12 hour a day.

Re: Silicon Valley's best kept secret: Founder liquidity

#478

Post by palata »

che_shirecat wrote: post #357
palata wrote: post #340

Earlier quoted context omitted.

Maybe I should, so that I could abuse from the employees and then explain how I deserve to get rich if MY startup succeeds but my employees don't (because it is MY startup, you see? I don't need them).

Good luck with this! Let us know how it goes. Founders have leverage, because they started the company. If you don't like it, start your own and don't join someone else's.

Where I come from, that's an ultra-liberal point of view. "Instead of saying that Elon Musk does not deserve 68b as a salary (because no human does), then maybe you should become ultra-rich yourself".

Sure. You just completely missed my point.

Re: Silicon Valley's best kept secret: Founder liquidity

#479

Post by closeparen »

shmel wrote: post #384
bradleyjg wrote: post #258

Earlier quoted context omitted.

All you’re saying is that in the contemporary context it’s exceedingly foolish to be an employee at an early startup. The VCs and founders have optimized away all the incentive. Eventually the message will reach even naive 22 year olds.

If you only care about money, sure. I have plenty of friends working in FAANG. For some mysterious reason any time I ask them about work, they say something along the lines "ehh... it's fiiiine. Paycheck is pretty good though". Okay, not all, but perhaps 95%. And half of them work massive overtime on regular basis. I can get behind working weekends when you hope to change the world. They often say things like: "yeah,…

The Bay Area housing market is too competitive for this. If you’re renting a room in your early 20s then sure just have fun, any tech job should cover it. If you want to own a place to raise a family in by your 30s, and you don’t have some exogenous source of wealth, you’re going to need every dollar of liquid compensation you can possibly get.

Re: Silicon Valley's best kept secret: Founder liquidity

#480

Post by zenlikethat »

mrkurt wrote: post #408
throwailearner wrote: post #297

Posting from throwaway so I can be very open. I joined a YC startup as engineer #1 with close to $200k salary and 2% options vesting at the usual 4 years, with a 10 year window. I feel like this was bettern than usual, and for a while felt like I struck an awesome deal, but as time went on I realised I was building everything single-handedly, while getting (at best) 2%, which started to annoy me deep down. Over two y…

This sounds like a bad job and you should find another. At some point you were happy with $200k and 2%. Now you aren't. I don't think there's a bump that they could give you at this point that would make you want to tolerate the shit that's bad about the job. Note that this is a bad job. Startups are more prone to creating bad jobs. The math for employee #1 at a startup is almost never ideal if you're being completel…

The ideal reason to be engineer number one tbh is if you want a playground (for lack of a better way of putting it) to build the system out the way you want. That will be of high value to specific people (Architects, not the LinkedIn kind) and low value to most of the population who just sees a job as a means to an end.

But for some people, direct access to an AWS account and license to build as they please is intoxicating.

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